6A – Identifying Opportunities in Economic and Regulatory Trends
Economic
Opportunities:
1. Trend
towards Passive Investing
a) There is
currently a trend towards passive investing. Many individuals would rather
focus on low-risk, small returns than high-risk, large returns. This has led to
the artificial price inflation of blue-chip companies with “low risk:” stock,
which could ultimately lead to a market crash, at which point there will be a
trend back towards active investing. I have developed this knowledge through
reading the Wall Street Journal.
b) Listening
to various industry experts who have spoken at UF events has led me to believe
this is an issue.
c) Customers
who are well-off financially (mostly because those who are wealthy are those
who invest).
d) I feel
that this opportunity would be difficult to exploit because (1) there is no
telling when the market will crash and (2) one would need to develop a track
record of successful past investments in order to attract new investors.
e) I feel
that given my participation in finance-related events/organizations on campus,
I have developed a better understanding of the market, and rather than fear
that it will crash, I see there will be an opportunity when it does.
2. China Trade
War
a) The trade
war with China is not secret. It makes headlines every week. But, while Trump sees
this trade war as a necessary evil, it hurts the operating income of countless
American companies. These firms could use an organization to either (1) lobby
for their interests or (2) connect them with other firms that may be able to
provide cheaper industrial materials.
b) From
reading countless CNN/Wallstreet Journal, I have gathered that this is a
problem in many manufacturing/industrial firms.
c) Firms
negatively impacted by the trade war.
d) I feel
that this may be a difficult opportunity to exploit simply because it would
require international coordination and understanding of the industrial markets
and economic regulations in multiple nations.
e) I think
that while many people see the trade war as a necessary evil to reach a better
future, I see that there may be a potential opportunity while the trade
war is taking place.
Regulatory
Opportunities:
1.
Legalization of Recreational Marijuana
a) I
developed the idea that this was an opportunity based on a local opportunity I
identified in the Tampa Bay times. Tampa is my hometown, and investors who
expect the legalization of medical marijuana are pouring money into the area to
take advantage of the new market formed if/when this regulation takes place.
b) With the
potential for legalization in Florida and other states (where recreational use
isn’t already legalized, that is), it seems likely nation-wide legalization is
not far away, in which case, the recreational marijuana industry will bloom.
c) In this
case, any American with the desire to use recreational marijuana would be the
ideal customer.
d)
Considering the popularity of this subject, the opportunity would likely be
difficult to exploit. Not only are there already many investors hoping to
exploit this opportunity, but one would need the infrastructure to either grow
or distribute the drug to capitalize on new regulation.
e) Whereas
some individuals may focus on the political implications of the recreational
marijuana discussion, I have thought about the topic in relation to finances.
2. Wage
and Labor Protections Granted to Contract Workers in California
a) This could
be considered a major problem for the firms of Silicon Valley. Alternatively, it
could be considered a major opportunity for the healthcare firms in the
area. In fact, they may not have the infrastructure to handle the large number
of healthcare plans being purchased now that contract workers could be provided
with healthcare benefits. There may be a major opportunity to establish a new
healthcare firm in the area or for existing healthcare firms to expand into
that market.
b) I found this
regulation on regulations.gov
c) Silicon Valley firms, Healthcare Insurance
Providers
d) This could be an easy opportunity
to exploit for an existing insurance provider with the infrastructure to
expand.
e) Being in the Healthcare Sector in
the Gator Student Investment Fund has led to my greater understanding of this industry.
I think that what you said for the economics portion of the post tied very closely together and had some interesting points. I believe low risk investing has a portion to do with the potential downswing of the market, but let's not forget to take into account the cyclical nature of the market (which is currently operating beyond its 8 year cycle), the trade war with China, the Fed reevaluating interest rates, GDP growth, and private sector economists clashing with those from the Fed. With the trade war, I can definitely understand how American business may currently be struggling. However, if we continue to allow China to manipulate currency, control the world markets, exploit poor countries for their oceanic trade route rights, and deny their citizens democracy and freedom, they will become an unstoppable superpower. We need to take punitive action now before they become a threat to freedom everywhere.
ReplyDeleteHi Johnathan! This is a very nice post. I also believe that there are big opportunities that come along with legalizing recreational marijuana use. However, with that said, I agree that this opportunity will be relatively difficult to exploit because one would need the infrastructure to to either grow or distribute the drug to capitalize on new regulation. Overall great job!
ReplyDeleteHey Jonathan,
ReplyDeleteI found it interesting that in your last point regarding wage and labor protections that there was both a major problem for one employment sector while there was also a major opportunities for another! These regulations, like you said can provide a big opening for the health care industry to expand. Today, many people are looking to alternative forms of healthcare programs apart from the typical medical care system so there is room for many companies to infiltrate.